This study examines outcome of treatment for psychoactive substance dependence in a clinic which made psychiatric care readily available. Veterans entering outpatient treatment for substance dependence (n= 222) received psychiatric evaluation for additional Axis I disorders using DSM-III-R criteria. Patients provided urine toxicology specimens at least weekly. Outcome (urinalysis results and treatment retention) was compared for patients with dual diagnosis (n= 103, 46.4%) and with substance only diagnosis (n= 119, 53.6%). Psychotropic medications were prescribed for 80.4% of the dual diagnosis subjects. In the first 6 months of treatment, dual diagnosis subjects compared to substance only diagnosis subjects gave a significantly greater percentage of urines positive for cocaine and opioids. In the second 6 months, dual diagnosis subjects who remained (n= 72, 70.0%) significantly reduced from the first 6 months their percentage of cocaine and opioid positives and did not differ in percent positives from substance only diagnosis subjects who continued past 6 months (n= 70, 58.8%). Treatment retention of dual diagnosis subjects (median months = 14.3) exceeded that of substance only diagnosis subjects (8.9; Lee-Desu Statistic = 9.02,p<. 003). Dual diagnosis patients may initially perform more poorly than substance only diagnosis patients in substance dependence treatment. However, in the presence of psychiatric care, they eventually exhibit comparable success.